Nasdaq Falls 0.63% as AI Spending Angst Grips Markets Ahead of Megacap Earnings

On July 24, 2026, the tech-heavy Nasdaq Composite slid 0.63% (157.35 points) to 24,980.34 as investors dumped chip stocks amid escalating anxiety over artificial intelligence spending, just days before a wave of megacap earnings reports. The broader market showed resilience, with the Dow Jones Industrial Average gaining 0.46% (235.87 points) to 51,947.52 and the S&P 500 inching up 0.07% (3.74 points) to 7,413.30, but the technology sector was a clear laggard. The S&P 500 technology index tumbled 0.88%, its heaviest weight on the benchmark, as the Philadelphia SE Semiconductor index sank. This divergence highlights a deepening market narrative: after years of piling into tech stocks on the promise of AI-driven growth, investors are now questioning the timeline and return on the massive capital outlays fueling that growth. The catalyst for the July 24 anxiety was Alphabet’s late July 22 announcement of a huge increase in capital spending, even as the company continues to burn cash. That single disclosure—made without a clear monetization roadmap—rekindled fears of an AI investment bubble. Late on July 23, Intel offered a glimmer of optimism by forecasting quarterly profit and revenue above Wall Street estimates and unveiling plans to boost spending over the next two years. However, Intel’s shares still plunged on July 24, along with the broader chip sector, demonstrating that even positive earnings beats cannot soothe nerves when the overarching narrative is dominated by unchecked spending. Adding to the market’s unease, oil prices fell more than 3% as traders booked profits amid ongoing Middle East hostilities and U.S.-Iran tensions, while new U.S. tariffs targeting 60 trading partners over forced-labor enforcement introduced another layer of geopolitical risk. In this volatile environment, defensive sectors found favor: real estate outperformed, led by Digital Realty Trust, which surged after raising its full-year funds from operations forecast, and materials saw strength from International Paper. Peter Andersen, CEO of Andersen Capital Management, captured the mood shift succinctly: “The fear of missing out is becoming more like a fear of massive overbuilding.” Investors are demanding clarity on how the hundreds of billions earmarked for AI infrastructure will translate into tangible profits, and patience is thinning. Next week’s earnings from Microsoft, Amazon, Meta, and Apple are poised to be a critical litmus test. If these behemoths fail to demonstrate that AI spending is generating material revenue growth or margin improvement, the tech sell-off could deepen. Conversely, any signs of accelerating AI-related revenue could reignite confidence. The current crossroads is reminiscent of the dot-com era, when infrastructure build-out eventually led to a crash because monetization lagged. However, proponents argue that today’s AI spending is fundamentally different—driven by cloud, enterprise adoption, and transformative productivity gains. The coming weeks will likely see heightened volatility as the market balances long-term potential against short-term fiscal discipline. For now, the message is clear: the AI capex cycle is entering a show-me phase, and the burden of proof is squarely on the technology giants.